DOCSLIB.ORG

Advanced Microeconomics Prof

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Advanced Microeconomics Prof Stern School of Business Advanced Microeconomics Prof. Nicholas Economides Preliminary Outline Spring 2006 M 1:00-4:00 Office Hours: Mon. 5-6pm, Tue. 5-6pm and by appointment, MEC 7-84 Tel. (212) 998-0864, FAX (212) 995-4218 www.stern.nyu.edu/networks [email protected] Required Books Jean Tirole, (1989), Industrial Organization, M.I.T. Press. Recommended Books Ken Arrow and Michael Intrilligator, (1981), Handbook of Mathematical Economics, North Holland. Ken Binmore, (1992), Fun and Games: A Text on Game Theory, D.C. Heath. Augustin Cournot, (1960), Researches into the Mathematical Principles of the Theory of Wealth, Kelly, NY (English translation by N.T. Bacon). Jim Friedman, (1977), Oligopoly and the Theory of Games, North Holland. Jim Friedman, (1983), Oligopoly Theory, Cambridge University Press. Jim Friedman, (1990), Game Theory With Application to Economics, Oxford University Press. Drew Fudenberg and Jean Tirole, (1991), Game Theory, MIT Press. John Harsanyi, (1977), Rational Behavior and Bargaining Equilibrium in Games and Social Situations, Cambridge University Press. David Kreps, (1990), A Course in Microeconomic Theory, Princeton University Press. Kelvin Lancaster, (1979), Variety, Equity and Efficiency, Columbia University Press, New York. R. Duncan Luce and Howard Raiffa, (1958), Games and Decisions, John Wiley, N.Y. Guillermo Owen, (1982), Game Theory, second edition, W. Saunders. Eric Rasmusen, (1989), Games and Information, Basil Blackwell. Richard Schmalensee and Robert Willig, (1989), Handbook of Industrial Organization, North Holland. Shapiro, Carl, and Hal Varian, Information Rules, Harvard Business School Press, 1999. Martin Shubik, (1983), Game Theory in the Social Sciences: Concepts and Solutions, The M.I.T. Press. John Sutton, Technology and Market Structure (MIT Press, 1998). Carl von Weiszacker, (1980), Barriers to Entry, Springer Verlag. Required reading is indicated by (*) Course Outline I. Review of Game Theory (1 week) i. Games in Extensive and Normal Forms 1. D. Luce and H. Raiffa, (1958), Games and Decisions, ch. 3. (*) 2. K. Binmore, (1992), Fun and Games, ch. 1. 3. E. Rasmusen, (1989), Games and Information, ch. 1, 2. 4. D. Kreps, (1990), A Course in Microeconomic Theory, ch. 11. ii. Non-cooperative Games 1. D. Luce and H. Raiffa, Games and Decisions, ch. 5. 2. J. Tirole, (1989), Industrial Organization, ch. 11. (*) 3. J. Nash, (1950), “Equilibrium Points in n-Person Games,” Proceedings of the National Academy of Sciences, vol. 36, at http://www.stern.nyu.edu/networks/Nash_Equilibrium_in_N-person_games.pdf 4. J. Nash, (1951), “Non-cooperative Games,” Annals of Mathematics, vol. 45, pp. 286-295. 5. G. Debreu, (1952), “A Social Equilibrium Existence Theorem,” Proceedings of the National Academy of Sciences, vol. 38, pp. 886-893. 6. J. Friedman, (1977), Oligopoly and the Theory of Games, pp. 152-162, http://www.stern.nyu.edu/networks/Friedman_Nash_equilibrium_existence.pdf (*) 7. M. Shubik, (1983), Game Theory in the Social Sciences, ch. 9. 8. D. Kreps, (1990), A Course in Microeconomic Theory, ch. 12. 9. K. Binmore, (1992), Fun and Games, ch. 7. iii. Cooperative Games 1. J. Nash, (1953), “Two-Person Cooperative Games,” Econometrica, vol. 21, pp. 128-140, at http://www.stern.nyu.edu/networks/phdcourse/Nash_Two_person_cooperative_ games.pdf (*) 2. J. Nash, (1950), “The Bargaining Problem,” Econometrica, vol. 18, pp. 155-162, at http://www.stern.nyu.edu/networks/Nash_The_Bargaining_Problem.pdf 3. L. Shapley, (1953), “A Value for n-Person Games,” in Contributions to the Theory of Games, vol. 2, pp. 307-317, eds. H. Kuhn and A. Tucker, at http://www.stern.nyu.edu/networks/Shapley_A_value_for_n-person_games.pdf. (*) 4. M. Shubik, Game Theory in the Social Sciences, ch. 6, 7. 2 II. Oligopoly in Homogeneous Goods (1.5 week) i. Non-cooperative Oligopoly Games 1. Quantity-setting Games a. J. Friedman, Oligopoly and the Theory of Games, ch. 1, 2. b. A. Cournot, Researches into the Mathematical Principles of the Theory of Wealth. c. J. Friedman, Oligopoly and the Theory of Games, ch. 4. d. J. Tirole, (1989), Industrial Organization, pp. 218-228. (*) e. J. Roberts and H. Sonnenschein, (1977), “On the Foundations of the Theory of Monopolistic Competition,” Econometrica, vol. 75, pp. 101-113, at http://www.stern.nyu.edu/networks/phdcourse/Roberts_Sonnenschein_On_t he_foundations.pdf f. J. Roberts and H. Sonnenschein, (1976), “On the Existence of Cournot Equilibrium without Concave Profit Functions,” Journal of Economic Theory, vol. 13, pp. 112-117, at http://www.stern.nyu.edu/networks/Roberts_Sonnenschein_On_the_Existen ce_of_Cournot_Equilibrium.pdf (*) g. W. Novshek and H. Sonnenschein, (1980), “Small Efficient Scale as a Foundation for Walrasian Equilibrium,” Journal of Economic Theory, vol. 22, pp. 243-255. h. W. Novshek, (1980), “Cournot Equilibrium with Free Entry,” Review of Economic Studies, vol. 47, pp. 473-486, at http://www.stern.nyu.edu/networks/Novshek_Cournot_Equilibrium_with_Fr ee_Entry.pdf i. T. Bergstrom and H. Varian, (1985), “Two Remarks on Cournot Equilibrium,” Economics Letters, vol. 19, pp. 5-8. 2. Price-setting Games a. J. Tirole, (1989), Industrial Organization, pp. 205-216. (*) 3. Other Strategy Spaces a. S. Grossman, (1981), “Nash Equilibrium and the Industrial Organization of Markets with Large Fixed Costs,” Econometrica, vol. 49, pp. 1149-1172, at http://www.stern.nyu.edu/networks/phdcourse/Grossman_S_Nash_equilibri um.pdf (*) 4. Mixed Strategies a. H. Varian, (1981), “A Model of Sales,” American Economic Review, vol. 70, no. 4, pp. 651-659, at http://www.stern.nyu.edu/networks/phdcourse/Varian_A_model_of_sales.p df , errata at http://www.stern.nyu.edu/networks/phdcourse/Varian_A_model_of_sales_e rrata.pdf (*) 3 5. Asymmetric Oligopoly Games. Von Stackelberg Paradigm. Asymmetric Cournot Games. a. A. Dixit, (1979), “A Model of Duopoly Suggesting a Theory of Entry Barriers,” Bell Journal of Economics, vol. 10, pp. 20-32, at http://www.stern.nyu.edu/networks/phdcourse/Dixit_A_model_of_duopoly. pdf (*) b. W. Novshek, (1984), “Finding All n-Firm Equilibria,” International Economic Review, vol. 25, no. 1, pp. 61-70. ii. Collusion, Coordination and Coalition Formation 1. M.-P. Donsimoni, N. Economides and H. Polemarchakis, (1986), “Stable Cartels,” International Economic Review, vol. 22, no. 2, pp. 317-327, at http://www.stern.nyu.edu/networks/Stable_Cartels.pdf (*) 2. M. Perry and R. Porter, (1985), “Oligopoly and the Incentive for Horizontal Merger,” American Economic Review, vol. 75, 219-227. 3. C. D’Aspremont and J. Jaskold-Gabszewicz, (1986), “On the Stability of Collusion,” in J. Stiglitz and C. F. Mathewson (eds.) New Developments in the Analysis of Market Structure, MIT Press. III. Oligopoly in Differentiated Products (2 weeks) i. Variety Differentiation 1. Duopoly a. H. Hotelling, (1929), “Stability in Competition,” Economic Journal, vol. 39, pp. 41-57, at http://www.stern.nyu.edu/networks/phdcourse/Hotelling_Stability_in_comp etition.pdf (*) b. C. D’Aspremont, J. Jaskold-Gabszewicz and J.-F. Thisse, (1979), “On Hotelling’s ‘Stability in Competition’,” Econometrica, vol. 47, pp. 1145-1150, at http://www.stern.nyu.edu/networks/phdcourse/DAspremont_Gabszewicz_T hisse_On_Hotellings_Stability_in_Competition.pdf (*) c. N. Economides, (1984), “The Principle of Minimum Differentiation Revisited,” European Economic Review, vol. 24, pp. 345-368, at http://www.stern.nyu.edu/networks/The_Principle_of_Minimum_Differenti ation_Revisited.pdf (*) d. J. Tirole, (1989), Industrial Organization, pp. 277-282. (*) e. N. Economides, (1986), “Nash Equilibrium Existence in Duopoly with Products Defined by Two Characteristics,” Rand Journal of Economics, vol. 17, no. 3, pp. 431-439, at http://www.stern.nyu.edu/networks/Nash_Equilibrium_in_Duopoly.pdf 2. Oligopoly a. K. Lancaster, (1979), Variety, Equity and Efficiency. 4 b. S. Salop, (1979), “Monopolistic Competition with Outside Goods,” Bell Journal of Economics, vol. 10, pp.141-156, at http://www.stern.nyu.edu/networks/phdcourse/Salop_Monopolistic_competi tion.pdf (*) c. W. Novshek, (1980), “Equilibrium in Simple Spatial (or Differentiated Product) Models,” Journal of Economic Theory, vol. 22, pp. 286-295. d. N. Economides, (1989), “Symmetric Equilibrium Existence and Optimality in Differentiated Products Markets,” Journal of Economic Theory, vol. 47. no. 1, pp. 178-194, at http://www.stern.nyu.edu/networks/Symmetric_Equilibrium_Existence.pdf (*) e. J. Tirole, (1989), Industrial Organization, pp. 282-289 (*) f. A. Dixit and J. Stiglitz, (1977), “Monopolistic Competition and Optimum Product Diversity,” American Economic Review, vol. 67, pp. 297-308, at http://www.stern.nyu.edu/networks/phdcourse/Dixit_Stiglitz_Monopolistic_ competition.pdf g. J. Tirole, (1989), Industrial Organization, pp. 298-300. h. M. Spence, (1976), “Product Selection, Fixed Costs and Monopolistic Competition,” Review of Economic Studies, vol. 43, pp. 217-236, at http://www.stern.nyu.edu/networks/phdcourse/Spence_Product_selection.pd f (*) i. M. Spence, (1976), “Product Differentiation and Welfare,” American Economic Review, Papers and Proceedings, vol. 66, no. 2, pp. 407-414, at http://www.stern.nyu.edu/networks/phdcourse/Spence_Product_differentiati on_and_welfare.pdf j. O. Hart, (1985), “Monopolistic Competition in the Spirit of Chamberlin: A General Model,” Review of Economic Studies, vol. 52, pp. 529-546. 3. Sequential Decisions a. E. Prescott and M. Visscher, (1977), “Sequential Location Among Firms with Foresight,” Bell Journal of Economics, vol. 8, pp. 243-248,
Load more

Recommended publications
  • Uniqueness and Symmetry in Bargaining Theories of Justice
    Philos Stud DOI 10.1007/s11098-013-0121-y Uniqueness and symmetry in bargaining theories of justice John Thrasher Ó Springer Science+Business Media Dordrecht 2013 Abstract For contractarians, justice is the result of a rational bargain. The goal is to show that the rules of justice are consistent with rationality. The two most important bargaining theories of justice are David Gauthier’s and those that use the Nash’s bargaining solution. I argue that both of these approaches are fatally undermined by their reliance on a symmetry condition. Symmetry is a substantive constraint, not an implication of rationality. I argue that using symmetry to generate uniqueness undermines the goal of bargaining theories of justice. Keywords David Gauthier Á John Nash Á John Harsanyi Á Thomas Schelling Á Bargaining Á Symmetry Throughout the last century and into this one, many philosophers modeled justice as a bargaining problem between rational agents. Even those who did not explicitly use a bargaining problem as their model, most notably Rawls, incorporated many of the concepts and techniques from bargaining theories into their understanding of what a theory of justice should look like. This allowed them to use the powerful tools of game theory to justify their various theories of distributive justice. The debates between partisans of different theories of distributive justice has tended to be over the respective benefits of each particular bargaining solution and whether or not the solution to the bargaining problem matches our pre-theoretical intuitions about justice. There is, however, a more serious problem that has effectively been ignored since economists originally J.
    [Show full text]
  • Refuting Lancaster's Characteristics Theory.Pdf
    A REFUTATION OF THE CHARACTERISTICS THEORY OF QUALITY PETER BOWBRICK ABSTRACT This is a formal refutation of the characteristics approach to the economics of quality, which is particularly associated with Kelvin Lancaster. Many of the criticisms apply equally to other approaches to the economics of quality. Copyright Peter Bowbrick, [email protected] 07772746759. The right of Peter Bowbrick to be identified as the Author of the Work has been asserted by him in accordance with the Copyright, Designs and Patents Act. ABSTRACT Lancaster‟s theory of Consumer Demand is the dominant theory of the economics of quality and it is important in marketing. Most other approaches share some of its components. Like most economic theory this makes no testable predictions. Indirect tests of situation-specific models using the theory are impossible, as one cannot identify situations where the assumptions hold. Even if it were possible, it would be impracticable. The theory must be tested on its assumptions and logic. The boundary assumptions restrict application to very few real life situations. The progression of the theory beyond the basic paradigm cases requires restricting and unlikely ad hoc assumptions; it is unlikely in the extreme that such situations exist. All the theory depends on fundamental assumptions on preferences, supply and characteristics. An alternative approach is presented, and it is shown that Lancaster‟s assumptions, far from being a reasonable approximation to reality, are an extremely unlikely special case. Problems also arise with the basic assumptions on the objectivity of characteristics. A fundamental logical error occurring throughout the theory is the failure to recognize that the shape of preference and budget functions for a good or characteristic will vary depending on whether a consumer values a characteristic according to the level in a single mouthful, in a single course, in a meal, in the diet as a whole or in total consumption, for instance.
    [Show full text]
  • Introduction to Game Theory
    Economic game theory: a learner centred introduction Author: Dr Peter Kührt Introduction to game theory Game theory is now an integral part of business and politics, showing how decisively it has shaped modern notions of strategy. Consultants use it for projects; managers swot up on it to make smarter decisions. The crucial aim of mathematical game theory is to characterise and establish rational deci- sions for conflict and cooperation situations. The problem with it is that none of the actors know the plans of the other “players” or how they will make the appropriate decisions. This makes it unclear for each player to know how their own specific decisions will impact on the plan of action (strategy). However, you can think about the situation from the perspective of the other players to build an expectation of what they are going to do. Game theory therefore makes it possible to illustrate social conflict situations, which are called “games” in game theory, and solve them mathematically on the basis of probabilities. It is assumed that all participants behave “rationally”. Then you can assign a value and a probability to each decision option, which ultimately allows a computational solution in terms of “benefit or profit optimisation”. However, people are not always strictly rational because seemingly “irrational” results also play a big role for them, e.g. gain in prestige, loss of face, traditions, preference for certain colours, etc. However, these “irrational" goals can also be measured with useful values so that “restricted rational behaviour” can result in computational results, even with these kinds of models.
    [Show full text]
  • ECONOMICS: the NEXT PHYSICAL SCIENCE? by J. Doyne Farmer
    ECONOMICS: THE NEXT PHYSICAL SCIENCE? By J. Doyne Farmer, Martin Shubik and Eric Smith June 2005 COWLES FOUNDATION DISCUSSION PAPER NO. 1520 COWLES FOUNDATION FOR RESEARCH IN ECONOMICS YALE UNIVERSITY Box 208281 New Haven, Connecticut 06520-8281 http://cowles.econ.yale.edu/ Economics: the next physical science? J. Doyne Farmer,1 Martin Shubik,2 and Eric Smith1 1Santa Fe Institute, 1399 Hyde Park Rd., Santa Fe NM 87501 2Economics Department, Yale University, New Haven CT (Dated: June 9, 2005) We review an emerging body of work by physicists addressing questions of economic organization and function. We suggest that, beyond simply employing models familiar from physics to economic observables, remarkable regularities in economic data may suggest parts of social order that can usefully be incorporated into, and in turn can broaden, the conceptual structure of physics. Contents physics departments specializing in econophysics. There is even a new annual research prize, titled the “Young I. Physics and economics 1 Scientist Award for Social and Econophysics”. Is this just a fad, or is there something more substantial here? II. Data analysis and the search for empirical regularitiesIf physicists2 want to do research in economics, why don’t they just get degrees in economics in the first place? Why don’t the econophysicists retool, find jobs in eco- III. Modeling the behavior of agents 4 nomics departments and publish in traditional economics journals? Perhaps this is just a temporary phenomenon, IV. The quest for simple models of non-rational choicedriven4 by a generation of physicists who made a bad ca- reer choice. Is there any reason why research in eco- nomics should be done in physics departments as an on- V.
    [Show full text]
  • Trade in Differentiated Products and the Political Economy of Trade Liberalization
    This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: Import Competition and Response Volume Author/Editor: Jagdish N. Bhagwati, editor Volume Publisher: University of Chicago Press Volume ISBN: 0-226-04538-2 Volume URL: http://www.nber.org/books/bhag82-1 Publication Date: 1982 Chapter Title: Trade in Differentiated Products and the Political Economy of Trade Liberalization Chapter Author: Paul Krugman Chapter URL: http://www.nber.org/chapters/c6005 Chapter pages in book: (p. 197 - 222) 7 Trade in Differentiated Products and the Political Economy of Trade Liberalization Paul Krugman Why is trade in some industries freer than in others? The great postwar liberalization of trade chiefly benefited trade in manufactured goods between developed countries, leaving trade in primary products and North-South trade in manufactures still highly restricted. Within the manufacturing sector some industries seem to view trade as a zero-sum game, while in others producers seem to believe that reciprocal tariff cuts will benefit firms in both countries. In a period of rising protectionist pressures, it might be very useful to have a theory which explains these differences in the treatment of different kinds of trade. This paper is an attempt to take a step in the direction of such a theory, I develop a multi-industry model of trade in which each industry consists of a number of differentiated products. The pattern of interindustrial specialization is determined by factor proportions, so that there is an element of comparative advantage to the model. But scale economies in production ensure that each country produces only a limited number of the products within each industry, so there is also intraindustry specializa- tion and trade which does not depend on comparative advantage.
    [Show full text]
  • Study of the Evolution of Symbiosis at the Metabolic Level Using Models from Game Theory and Economics Martin Wannagat
    Study of the evolution of symbiosis at the metabolic level using models from game theory and economics Martin Wannagat To cite this version: Martin Wannagat. Study of the evolution of symbiosis at the metabolic level using models from game theory and economics. Quantitative Methods [q-bio.QM]. Université de Lyon, 2016. English. NNT : 2016LYSE1094. tel-01394107v2 HAL Id: tel-01394107 https://hal.inria.fr/tel-01394107v2 Submitted on 22 Nov 2016 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. No d’ordre NNT : xxx THÈSE DE DOCTORAT DE L’UNIVERSITÉ DE LYON opérée au sein de l’Université Claude Bernard Lyon 1 École Doctorale ED01 E2M2 Spécialité de doctorat : Bioinformatique Soutenue publiquement/à huis clos le 04/07/2016, par : Martin Wannagat Study of the evolution of symbiosis at the metabolic level using models from game theory and economics Devant le jury composé de : Nom Prénom, grade/qualité, établissement/entreprise Président(e) Bockmayr Alexander, Prof. Dr., Freie Universität Berlin Rapporteur Jourdan Fabien, CR1, INRA Toulouse Rapporteur Neves Ana Rute, Dr., Chr. Hansen A/S Rapporteure Charles Hubert, Prof., INSA Lyon Examinateur Andrade Ricardo, Dr., INRIA Rhône-Alpes Examinateur Sagot Marie-France, DR, LBBE, INRIA Rhône-Alpes Directrice de thèse Stougie Leen, Prof., Vrije Universiteit, CWI Amsterdam Co-directeur de thèse Marchetti-Spaccamela Alberto, Prof., Sapienza Univ.
    [Show full text]
  • Download the Paper in PDF Format
    Is The Price Right? Reexamining the Relationship Between Age and the Value of Statistical Life Daniel Eric Herz-Roiphe Harvard College 2010 M-RCBG Associate Working Paper Series | No. 5 Winner of the 2010 John Dunlop Undergraduate Thesis Prize in Business and Government The views expressed in the M-RCBG Fellows and Graduate Student Research Paper Series are those of the author(s) and do not necessarily reflect those of the Mossavar-Rahmani Center for Business & Government or of Harvard University. The papers in this series have not undergone formal review and approval; they are presented to elicit feedback and to encourage debate on important public policy challenges. Copyright belongs to the author(s). Papers may be downloaded for personal use only. Mossavar-Rahmani Center for Business & Government Weil Hall | Harvard Kennedy School | www.hks.harvard.edu/mrcbg IS THE PRICE RIGHT? REEXAMINING THE RELATIONSHIP BETWEEN AGE AND THE VALUE OF STATISTICAL LIFE An Essay Presented by Daniel Eric Herz-Roiphe to The Committee on Degrees in Social Studies in partial fulfillment of the requirements for a degree with honors of Bachelor of Arts Harvard University March 2010 TABLE OF CONTENTS Introduction: Pricing Life and Discounting Death……………………………………2 Chapter 1: Age, Cognition, and VSL ………………………………………………17 Chapter 2: Results of an Online Contingent Valuation Survey……………………...61 Chapter 3: Rethinking Regulation…………………………………………………..96 Conclusion: The Value of Price……………………………………………………130 References……………………………………………………………………….137 Appendix………………………………………………………………………...154
    [Show full text]
  • War Gaming in the Information Age—Theory and Purpose Paul Bracken
    Naval War College Review Volume 54 Article 6 Number 2 Spring 2001 War Gaming in the Information Age—Theory and Purpose Paul Bracken Martin Shubik Follow this and additional works at: https://digital-commons.usnwc.edu/nwc-review Recommended Citation Bracken, Paul and Shubik, Martin (2001) "War Gaming in the Information Age—Theory and Purpose," Naval War College Review: Vol. 54 : No. 2 , Article 6. Available at: https://digital-commons.usnwc.edu/nwc-review/vol54/iss2/6 This Article is brought to you for free and open access by the Journals at U.S. Naval War College Digital Commons. It has been accepted for inclusion in Naval War College Review by an authorized editor of U.S. Naval War College Digital Commons. For more information, please contact [email protected]. Bracken and Shubik: War Gaming in the Information Age—Theory and Purpose WAR GAMING IN THE INFORMATION AGE Theory and Purpose Paul Bracken and Martin Shubik ver twenty years ago, a study was carried out under the sponsorship of the ODefense Advanced Research Projects Agency and in collaboration with the General Accounting Office to survey and critique the models, simulations, and war games then in use by the Department of Defense.1 From some points of view, twenty years ago means ancient history; changes in communication tech- nology and computers since then can be measured Paul Bracken, professor of management and of political science at Yale University, specializes in national security only in terms of orders of magnitudes. The new world and management issues. He is the author of Command of the networked battlefield, super-accurate weapons, and Control of Nuclear Forces (1983) and of Fire in the and the information technology (IT) revolution, with its East: The Rise of Asian Military Power and the Second Nuclear Age (HarperCollins, 1999).
    [Show full text]
  • What Is Game Theory Trying to Accomplish?
    1 What Is Game Theory Trying to Accomplish? 1 Introduction The language of game theory—coalitions, payo¤s, markets, votes— suggests that it is not a branch of abstract mathematics; that it is moti- vated by and related to the world around us; and that it should be able to tell us something about that world. Most of us have long realized that game theory and the ‘‘real world’’ (it might better be called the complex world) have a relationship that is not entirely comfortable; that it is not clear just what it is that we are trying to do when we build a game- theoretic model and then apply solution concepts to it. This is the subject I would like to explore in this paper. I might add that much the same questions apply to economic theory, at least the kind that those of us working in mathematical economics see most often; and that much of my paper will apply, mutatis mutandis, to economic theory as well. There is a branch of philosophy that deals with theory in the social sciences, so some of the things I have to say are unquestionably old hat. But I am not trying to be particularly original: I am only trying to open this topic, which I think concerns all of us, for discussion, and to suggest a particu- lar point of view. No doubt others have thought about these questions more thoroughly and deeply than I have, and are better versed in the history and philosophy of science in general. I will be grateful to anybody who sets me straight when I err, and who gives me references for the things I get right.
    [Show full text]
  • 1 the Nobel Prize in Economics Turns 50 Allen R. Sanderson1 and John
    The Nobel Prize in Economics Turns 50 Allen R. Sanderson1 and John J. Siegfried2 Abstract The first Sveriges Riksbank Prizes in Economic Sciences in Memory of Alfred Nobel, were awarded in 1969, 50 years ago. In this essay we provide the historical origins of this sixth “Nobel” field, background information on the recipients, their nationalities, educational backgrounds, institutional affiliations, and collaborations with their esteemed colleagues. We describe the contributions of a sample of laureates to economics and the social and political world around them. We also address – and speculate – on both some of their could-have-been contemporaries who were not chosen, as well as directions the field of economics and its practitioners are possibly headed in the years ahead, and thus where future laureates may be found. JEL Codes: A1, B3 1 University of Chicago, Chicago, IL, USA 2Vanderbilt University, Nashville, TN, USA Corresponding Author: Allen Sanderson, Department of Economics, University of Chicago, 1126 East 59th Street, Chicago, IL 60637, USA Email: [email protected] 1 Introduction: The 1895 will of Swedish scientist Alfred Nobel specified that his estate be used to create annual awards in five categories – physics, chemistry, physiology or medicine, literature, and peace – to recognize individuals whose contributions have conferred “the greatest benefit on mankind.” Nobel Prizes in these five fields were first awarded in 1901.1 In 1968, Sweden’s central bank, to celebrate its 300th anniversary and also to champion its independence from the Swedish government and tout the scientific nature of its work, made a donation to the Nobel Foundation to establish a sixth Prize, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.2 The first “economics Nobel” Prizes, selected by the Royal Swedish Academy of Sciences were awarded in 1969 (to Ragnar Frisch and Jan Tinbergen, from Norway and the Netherlands, respectively).
    [Show full text]
  • Chronology of Game Theory
    Chronology of Game Theory http://www.econ.canterbury.ac.nz/personal_pages/paul_walker/g... Home | UC Home | Econ. Department | Chronology of Game Theory | Nobel Prize A Chronology of Game Theory by Paul Walker September 2012 | Ancient | 1700 | 1800 | 1900 | 1950 | 1960 | 1970 | 1980 | 1990 | Nobel Prize | 2nd Nobel Prize | 3rd Nobel Prize | 0-500AD The Babylonian Talmud is the compilation of ancient law and tradition set down during the first five centuries A.D. which serves as the basis of Jewish religious, criminal and civil law. One problem discussed in the Talmud is the so called marriage contract problem: a man has three wives whose marriage contracts specify that in the case of this death they receive 100, 200 and 300 respectively. The Talmud gives apparently contradictory recommendations. Where the man dies leaving an estate of only 100, the Talmud recommends equal division. However, if the estate is worth 300 it recommends proportional division (50,100,150), while for an estate of 200, its recommendation of (50,75,75) is a complete mystery. This particular Mishna has baffled Talmudic scholars for two millennia. In 1985, it was recognised that the Talmud anticipates the modern theory of cooperative games. Each solution corresponds to the nucleolus of an appropriately defined game. 1713 In a letter dated 13 November 1713 Francis Waldegrave provided the first, known, minimax mixed strategy solution to a two-person game. Waldegrave wrote the letter, about a two-person version of the card game le Her, to Pierre-Remond de Montmort who in turn wrote to Nicolas Bernoulli, including in his letter a discussion of the Waldegrave solution.
    [Show full text]
  • Subjecjwity and Correlation in Randomized Strategies*
    Journal of Mathematical Economics 1 (1974) 67-96. Q North-Holland Publishing Company SUBJECJWITY AND CORRELATION IN RANDOMIZED STRATEGIES* Robert J. AUMANN The Hebrew University of Jerusalem, Jerusalem, Israel Received 15 April 1973 1. Introduction Subjectivity and correlation, though formally related, are conceptually distinct and independent issues. We start by discussing subjectivity. A mixed strategy in a game involves the selection of a pure strategy by means of a random device. It has usually been assumed that the random device is a coin flip, the spin of a roulette wheel, or something similar; in brief, an ‘objective’ device, one for which everybody agrees on the numerical values of the proba- bilities involved. Rather oddly, in spite of the long history of the theory of subjective probability, nobody seems to have examined the consequences of basing mixed strategies on ‘subjective’ random devices, i.e. devices on the probabilities of whose outcomes people may disagree (such as horse races, elections, etc.). Even a fairly superficial such examination yields some startling results, as follows : (a) Two-person zero-sum games lose their ‘strictly competitive’ character. It becomes worthwhile to cooperate in such games, i.e. to enter into binding agreements.’ The concept of the ‘value’ of a zero-sum game loses some of its force, since both players can get more than the value (in the utility sense). (b) In certain n-person games with n 2 3 new equilibrium points appear, whose payoffs strictly dominate the payoffs of all other equilibrium points.2 Result (a) holds not just for certain selected 2-person O-sum games, but for practically3 all such games.
    [Show full text]